All the Options! Lease, Purchase or PPA Your Solar Panel System?

You are interested in going solar and have heard the pros and cons of leasing vs. purchasing your solar system. Which is best? Let us touch on some of the details of those two options and add one more, a Power Purchase Agreement (PPA).

Most of us are familiar with the main differences in leasing and purchasing through our experience with vehicle purchases and leases. With solar, it’s the same concept. Purchasing means you end up owning the system and with leasing, you don’t end up owning your solar system. A PPA is very similar to a lease in that you will not own your solar panels. 

Break it Down for Me

If you lease your solar system (this is called a solar lease) or sign a PPA, you are renting the solar panel system from the company that owns it. If you sign a PPA, you are also purchasing the energy produced by the solar system from the company that owns the system. In the solar lease scenario, you are locking in your monthly payment for the system and protecting yourself from rate hikes from the power company because you are generating your own electricity. The PPA provides you with a discounted rate per kilowatt which ultimately helps you save money. 

If you decide to purchase your solar panel system you have a couple of options. You can pay cash and own your solar system immediately or you can get a loan to finance the cost of the system. There are a variety of options for solar loans but the most common is either a home equity line of credit (HELOC) or an unsecured loan. In the case of the HELOC, your home is the collateral for the loan, which will reduce your interest rate (less risk for the bank). The unsecured loan will, most likely, carry a higher interest rate since it is not using the home as collateral. 

The great thing about the purchase option, whether you finance or not, is that you can take advantage of the Federal Solar Tax Credit. If you were to lease your solar system or choose the PPA route, you would not qualify for the Federal Solar Tax Credit. What’s great about the tax credit is that it can cover up to 30% of the cost of your solar panel system by providing you a credit against your tax liability. This credit is applied for the same year you install your solar panel system. 

System Maintenance

Who covers the expense of solar panel maintenance?

Generally, if you enter into a solar lease or PPA agreement, the owner of the system maintains the equipment for the term of the agreement. In some cases, this is bundled into the cost of the system and other times it is offered as an additional expense item.  If you own your system, you are responsible for the maintenance of your system. However, there is very little annual maintenance on solar panel systems and the SunPower brand, which we represent, has an industry-leading warranty. So, you are pretty much covered for any issues that may arise.

Which option is best for resale?

Good question! The purchase option is the best option for the resale of your home. Even if you have a solar loan, banks should have no issue extending a mortgage to the buyer. However, PPA and lease options can be a bit more tricky. Transferring a lease can sometimes be difficult and in some cases, the PPA may require you to pay off the balance of the agreement. Either way, your home is much more valuable with a solar panel system installed than a home without a solar system.

Whichever option you choose you are deciding to take control of your carbon footprint and reduce or eliminate your reliance on power utility companies. The choice you make to achieve this depends on your financial abilities and your long term financial goals.

At SAVKAT Solar, we are prepared to answer the tough questions and help you make the best choice for you, your family and the environment.

Are you ready to learn more? To find out how you can go solar and become less energy independent, request a free quote from us at SAVKAT Solar. Still have more questions? Check out our Solar 101 page or our FAQ page. If that still leaves you unsure, we are happy to answer any other questions by giving us a call at 800-860-6932.

Leave a Reply

Your email address will not be published. Required fields are marked *